Tex.
Labor Code Section 204.084
Acquisition of Part of Experience-rated Organization, Trade, or Business: Approval of Transfer of Compensation Experience Without Substantially Common Management or Control or Substantially Common Ownership; Contribution Rate
(a)
If an employing unit acquires or otherwise receives, through any means, part of the organization, trade, or business of an employer, and transfer of compensation experience is not required by Section 204.083 (Acquisition of All or Part of Experience-rated Organization, Trade, or Business; Transfer of Compensation Experience), the successor employing unit and the predecessor employer may jointly make a written application to the commission to transfer the compensation experience of the predecessor employer that is attributable to the part of the organization, trade, or business acquired to the successor employing unit.(b)
If the acquisition results from the death of the predecessor employer, the requirement that the predecessor employer join in the application for transfer of the compensation experience does not apply.(c)
Except as provided by Subsection (d), the commission shall approve an application if:(1)
immediately after the acquisition the successor employing unit continues operation of substantially the same part of the organization, trade, or business acquired;(2)
the predecessor employer waives in writing all rights to an experience rating computed on the compensation experience attributable to the part of the organization, trade, or business acquired by the successor employing unit, unless the acquisition results from the death of the predecessor employer;(3)
a definitely identifiable and segregable part of the predecessor employer’s compensation experience is attributable to the part of the organization, trade, or business acquired;(4)
for a successor employing unit that is not an employer at the time of the acquisition, the successor employing unit elects to become an employer on the date of the acquisition or otherwise becomes an employer during the year in which the acquisition occurs;(5)
the application was filed with the commission not later than the first anniversary of the effective date of the acquisition; and(6)
the applicants have shown that:(A)
the acquired part of the organization, trade, or business is capable of operating independently and separately from the predecessor employer; and(B)
the wages attributable to the acquired part of the organization, trade, or business are solely attributable to services provided on behalf of the acquired part of the organization, trade, or business.(d)
The commission shall deny a transfer of compensation experience under this section if the commission determines that the transfer was done primarily to qualify for a reduced compensation experience rating by either:(1)
circumventing the experience rating system; or(2)
manipulating the experience rating system by minimizing the impact of chargebacks to the predecessor’s or successor’s tax account.(e)
A successor employing unit that acquires compensation experience under this section and that is an experience-rated employer on the date of and during the period preceding the acquisition shall pay contributions from the date of the acquisition until the end of the calendar year in which the acquisition occurred at the rate applicable to the successor employing unit on the date of acquisition.(f)
A successor employing unit that acquires compensation experience under this section and that is not an experience-rated employer on the date of the acquisition shall pay contributions from the date of the acquisition until the next contribution rate computation date at the highest rate applicable at the time of the acquisition to any predecessor employing unit that is a party to the acquisition. If the commission determines that the transfer was accomplished solely or primarily for the purpose of obtaining a lower contribution rate, the successor employing unit’s contribution rate must be determined under Section 204.006 (Initial Contribution Rate).
Source:
Section 204.084 — Acquisition of Part of Experience-rated Organization, Trade, or Business: Approval of Transfer of Compensation Experience Without Substantially Common Management or Control or Substantially Common Ownership; Contribution Rate, https://statutes.capitol.texas.gov/Docs/LA/htm/LA.204.htm#204.084 (accessed Jun. 5, 2024).
